QA
  • The economy is doing and giving us the flexibility to move carefully and methodically
  • We have to see firm evidence of improvement on rates
  • If we think we have to move faster on rates, we can but key is that we have flexibility
  • It will be up to committee on timing of when to start cuts
  • We're in an unusual place where we can move rates down without a shock to the economy
  • There are things we want to be careful about
  • Whether we miss the timing on rate cuts by six weeks, it hard to believe that's going to have a big effect on the economy
  • Once supply adjustment is complete [from the pandemic], it will be clearer whether demand is falling enough to finish the inflation fight, it's an issue to watch.
  • Approx endpoint for reserves is likely around 10-11% of GDP ... overnight repo doesn't need to have anything in it
  • 4% wage growth is a 'little high' but not much

This was a good interview and there's some focus on the comments on the balance sheet and how a taper might unfold. Overall, the odds of a March cut have dipped while the market still sees 159 bps this year, which is more than double the 75 bps that Waller highlighted in the dot plot.